Monday, October 29, 2012

FOIA Report Shows How Mitt Romney Avoided Paying Taxes For 15 Years

Bloomberg News confirmed through using a Freedom of Information Act request that Mitt Romney set up a charitable remainder unitrust (CRUT) in June 1996 just before Congress cracked down on the loophole in 1997. While Republicans have extolled Romney for his charitable donations, most of them are contributions to the Mormon Church, and according to this, the church will likely receive even less than the primary donation, while he is benefiting.

Individuals who had already set up these vehicles were allowed to keep them. That included Mitt Romney, then the chief executive officer of Bain Capital, who had just established such an arrangement in June 1996.“In this instance, Romney used the tax-exempt status of a charity — the Mormon Church, according to a 2007 filing — to defer taxes for more than 15 years,” Bloomberg’s Jesse Drucker explained. “At the same time he is benefitting, the trust will probably leave the church with less than what current law requires.”While Romney’s tax avoidance is legal, it’s still questionable since he has refused to release his tax returns.“In this instance, Romney used the tax-exempt status of a charity — the Mormon Church, according to a 2007 filing — to defer taxes for more than 15 years,” Bloomberg’s Jesse Drucker explained. “At the same time he is benefitting, the trust will probably leave the church with less than what current law requires.”“The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said. Despite the name, giving a gift or getting a charitable deduction “is just a throwaway,” he said. “I used to structure them so the value dedicated to charity was as close to zero as possible without being zero.”(my bold)When individuals fund a charitable remainder unitrust, or “CRUT,” they defer capital gains taxes on any profit from the sale of the assets, and receive a small upfront charitable deduction and a stream of yearly cash payments.As the article explains Romney’s CRUT, is only a small part of the $250 million that Romney’s campaign cites as his net worth, and has been paying him 8 percent of its assets each year. “As the Romneys have received these payments, the money that will potentially be left for charity has declined from at least $750,000 in 2001 to $421,203 at the end of 2011.”Jesse Drucker wrote a detailed articlesurrounding Mitt Romney’s tax avoidance, which I urge you to read.Someone call Harry Reid, quick!